What is Bank Fraud?
Bank fraud occurs when an individual uses deception and illegal means to defraud a financial institution, usually in an effort to acquire money or other assets. Under 18 U.S.C. § 1344, is at risk of a bank fraud conviction when and individual knowingly conducts, or attempts to conduct a scheme that:
- Defrauds a financial institution; or
- Results in the defendant obtaining money or other assets under the custody or control of a financial institution via false or fraudulent pretenses, representations, or promises
For clarity, financial institutions include federally insured banks or credit unions. There are many forms of bank fraud, which include, but are not limited to, forged or stolen checks, fraudulent loan applications, identity theft, and so on. Not only may individuals be charged with bank fraud, but financial institutions themselves may be charged if it is found they played a role in fraudulent activity. Those found guilty of bank fraud face a maximum fine of $1 million and up to 30 years imprisonment.
How do Banks Investigate Unauthorized Transactions?
When banks look into possible fraudulent activity, they usually begin their investigations with the suspect transactions themselves. If a bank’s client does not request an investigation into potential fraudulent transactions surrounding an account, a bank’s automated system usually alerts the bank to suspicious activity. After a bank has become aware of an unauthorized transaction, it uses the account’s transactional history which includes IP addresses, time stamps, location, and so on. Then, the bank will decide whether unauthorized transactions took place.
Bank Fraud and the Payment Protection Program
Currently, bank fraud is a hot topic due to the federal government cracking down on fraudulent Payment Protection Program (“PPP”) loan applications. When the PPP was still active, individuals submitted documents to banks, and now those who submitted documents with false or fraudulent information are being charged with bank fraud, among other things. In addition, Financial institutions may also be charged with bank fraud for submitting a fraudulent PPP loan application.
The Small Business Administration is presently auditing companies that received over $2 million in PPP loans. The Department of Justice has issued grand jury subpoenas to banks as part of its investigations into potential PPP loan fraud. These subpoenas allow investigators to obtain loads of evidence against potential acts of bank fraud and PPP loan fraud. As of now, subpoenas issued to banks are goldmines for prosecutors going after bank and PPP loan fraud.
On its own, charges of bank fraud are stressful and often confusing. Moreover, bank fraud and its interplay with the PPP is complex and legal counsel may be necessary to assist in its navigation. Federal charges are not to be taken lightly, and Cantafio & Song PLLC’s experience in this area is useful for anyone facing bank fraud charges, particularly in the PPP context. Reach out today!